Daily Archives: 2012-04-26

Another Government Investment Goes Belly Up!

~ By: Kumaran Pillai ~

Ireland’s former state telecom operator eircom applied for court protection to allow it to restructure its 3.75 billion euro (US$5 billion) debt mountain. A move eircoms officials said was “necessary and unavoidable” (here).

The proposal allows the lenders to take control from the major shareholder Singapore Technologies Telemedia (STT), a subsidiary of Temasek Holdings. This is expected to cut the debt load by 40 to 50 percent.

Temasek Holdings bought 65% shareholdings of eircom for 140 million Euros in 2009. The other 35% was owned by their employee share trust.

In 2006, Temasek Holdings bought 49.6% stake in Shin Corporation, a leading Thai telecommunications company, through two nominees of Temasek Holdings (Cedar Holdings and Aspen Holdings). The investment was subsequently embroiled in controversy (here). There have been numerous reports of such failed investments in the past.

In a proposal by the Economic Strategies Committee in February 2010, the Government was encouraged to invest up to $1.5 billion in Singapore-based enterprises to help them grow and even take a stake in them (here). The proposal was, however, met with scepticism by our local bureaucrats.

Huang Yasheng, the Beijing-born Massachusetts Institute of Technology (MIT) professor said that, ‘state-linked enterprise models are a sure-fire way to stifle the economy in the long run. The private sector is the best way to grow the economy. It has the most productive, most innovative and entrepreneurial culture. The state-owned enterprise system doesn’t give you that.’

The fear is that despite all the foreign investment losses and evidence that state-owned enterprises don’t work, our administrators will continue with its current failed policy framework.

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TOC Editorial: Population Paper has the fundamentals wrong

~ By TOC Editorial ~

So this is the new normal?

Just when we thought our Government had heard  the call of Singaporeans to moderate the flow of immigration, the National Population and Talent Division (NPTD), under the purview of Deputy Prime Minister Teo Chee Hean, seems bent on convincing us of our folly  with a policy paper (an “Occasional Paper”)  heavily biased in favour of an ever-more open-door policy.

Simply put, the Occasional Paper states that Singapore’s Total Fertility Rate (TFR) is unsustainably low, and that the solution to demographic decay is immigration.

More precisely, immigration at a rate of 25,000 new citizens a year.

First, two caveats:  the current Occasional Paper lays the groundwork for  a more definitive “White Paper” at the end of this year.  The Occasional Paper is not definitive, leaving open the possibility   of its recommendations  being altered in the “White Paper”,   depending on the severity of a potential public backlash.

Also, it is important to note that increasing citizen numbers, while it could entail the loosening of current citizenship requirements, does not necessarily mean an increase in the absolute population size.

Regardless, this Occasional Paper will be crucial in framing the debate the government would like to have.

To put the “25,000” figure in perspective, there were 17,334 new citizens in 2007, 20,513 new citizens in 2008, 19,928 new citizens in 2009, and 18,758 new citizens in 2010.

Remember, these are the current inflows at which Singaporeans are saying: “enough, slow down!”

The sound of silence

What might be more alarming than what the Occasional Paper says is what it doesn’t.

The immigration projections in the Occasional Paper are based on the assumption that our TFR stays at 1.2. So, on the assumption that TFR stays constant, the number 25,000 is cited as sufficient to stem the tide of an ageing population.

There is no estimate of how many more new citizens a year we will have to admit if our TFR continues to deteriorate at the rate it has been for the last few decades.

Which begs the question: why has Singapore’s TFR fallen to such abysmal levels?

The Occasional Paper would have you believe this is no fault of the government, and that increasing affluence and  prudent family planning is the source of this. It cites similar declines in Hong Kong, Taiwan and Japan.

While this certainly tells part of the story, what is equally to blame is the government's nonchalance in its efforts to staunch the TFR decline.

The most substantive policy the paper is able to point to is the “Marriage and Parenthood package” introduced in 2001. That year  the government threw $500 million at the problem, in 2004 it tossed in $800 million, and this was doubled  again to $1.6 billion in 2008.

It’s more than a little strange that the government has not realized that perhaps throwing money at the TFR problem is not the solution.

Starting at the beginning

Seeking  the root causes of the population decline begins with understanding why couples have children. Or, in Singapore’s case, why couples choose not to.

The reasons are legion.

For starters, what sane parent-to-be wants to bring up a child who is going to have to face the rigours of one of the most competitive and stressful education systems in the world, the scholastic equivalent of the Hunger Games?

Who, stuck on the treadmill of economic survival, has time to take a breather to nurture the romances that form the building blocks of stable family units?

And perhaps it is here that the recent debate on income inequality becomes relevant: if you belong a low income group in Singapore, how are you going to afford to have children? Would you want to run the risk of your children falling into the same wage rut as you?

Ironically, the government’s “solution” of an open-door immigration policy could be part of the reason Singaporeans don’t feel that the conditions are right to have children.

Much of the economic hardship of today, rightly or wrongly, has been blamed on the government’s indiscriminate immigration policies. They are believed to have caused rising property prices, increased competition in the workforce, and an infrastructure buckling under the weight of the deluge. 

While keeping in mind the caveat that increasing citizen numbers does not necessarily equate to increasing population growth, to chart a course towards looser citizenship requirements before our ongoing national debate on the value of a pink IC is concluded comes across as reckless.

A more practical implication is this: young Singaporean couples are already marrying later and having less children, put off by increasing lengths of mortgage debt servicing and waiting times for HDBs.

With the dramatic increase in citizenship and people eligible to own public housing, this problem is likely to get worse.

If native Singaporeans feel increasingly disinclined to have babies, and the government’s only solution is to replace Singaporeans by evermore desperately giving out citizenship to foreigners, this all looks a bit like a race to the bottom.

There aren’t any simple answers to staunching the demographic bleeding, but one thing is clear enough: choosing the easy way out by importing citizens is as simplistic and silly an idea as throwing money at couples and expecting them to procreate.

The path to a better answer starts with answering a more fundamental question: how do we create a society nurturing, accepting, and adequate enough that we would feel safe introducing a new life into it? 


What are the reasons you've chosen for not starting a family? Please comment or write in to us at [email protected]

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Another Government Investment Goes Belly Up!

~ By Kumaran Pillai ~

Ireland's former state telecom operator eircom applied for court protection to allow it to restructure its 3.75 billion euro (US$5 billion) debt mountain. A move eircoms officials said was "necessary and unavoidable" (here).

The proposal allows the lenders to take control from the major shareholder Singapore Technologies Telemedia (STT), a subsidiary of Temasek Holdings. This is expected to cut the debt load by 40 to 50 percent.

Temasek Holdings bought 65% shareholdings of eircom for 140 million Euros in 2009. The other 35% was owned by their employee share trust.

In 2006, Temasek Holdings bought 49.6% stake in Shin Corporation, a leading Thai telecommunications company, through two nominees of Temasek Holdings (Cedar Holdings and Aspen Holdings). The investment was subsequently embroiled in controversy (here). There have been numerous reports of such failed investments in the past.

In a proposal by the Economic Strategies Committee in February 2010, the Government was encouraged to invest up to $1.5 billion in Singapore-based enterprises to help them grow and even take a stake in them (here). The proposal was, however, met with scepticism by our local bureaucrats.  

Huang Yasheng, the Beijing-born Massachusetts Institute of Technology (MIT) professor said that, ‘state-linked enterprise models are a sure-fire way to stifle the economy in the long run. The private sector is the best way to grow the economy. It has the most productive, most innovative and entrepreneurial culture. The state-owned enterprise system doesn't give you that.'

The fear is that despite all the foreign investment losses and evidence that state-owned enterprises don’t work, our administrators will continue with its current failed policy framework. 

_________________________

Public transportation breakdowns – who is in charge?

 

The  letter below from Mr Phillip Ang was sent to Prime Minister Lee Hsien Loong, Transport Minister Lui Tuck Yew, and the Land Transport Authority. We thank Mr Ang for allowing us to publish it in full.

Dear PM Lee,

I refer to the high incidence of public transportation breakdowns, the latest occurring on three consecutive days last week.

No system is perfect but the number of breakdowns are clearly not acceptable, especially in Singapore, as cars are priced out of reach and public transportation is not a choice for the masses.

The MRT system has been in service since 1987 when our population was only 2.7 million.  In all likelihood, our public transportation had not taken into account a population growth rate of about 100,000 annually.  That 'some disruptions and defects on the MRT are unavoidable' must already be obvious to commuters.   

The addition of 1520 train trips since 2011 and more than 2900 since 2008 is also likely to have overloaded the system.  These additions are still insufficient due to an existing high population growth rate.  Further additions are likely to strain the system and cause catastrophic breakdowns, especially inside a tunnel, in future.  

During the COI on 16 Apr, the LTA threw the spotlight on SMRT's maintenance.  The SMRT countered it had inherited ageing infrastructures from the LTA.  Commuters are least interested in all this finger pointing.  We only want a system which is affordable and gets us from point A to point B safely.  And of course on time.

The resignation of Ms Saw Paik Hwa, ex $1.85 million CEO of SMRT, has clearly not made any difference because it is a systemic problem. 

Is the organisational chart of the LTA so complex that makes it impossible to pinpoint who was in charge?  Was maintenance so slack due to a high number of foreigners holding technical positions in the SMRT?  The solution does not lie only in hardware replacements.  

The government must not sidestep the issue of accountability. Thank you.

Regards

Phillip Ang
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